Pakistan swaps handouts for handshakes

December 15, 2025 (MLN):  Pakistan has formally pivoted from aid-based economic support to a trade- and investment-driven growth model, a major shift in its economic strategy aimed at achieving long-term stability, boosting productivity, and strengthening regional partnerships, particularly with Gulf Cooperation Council (GCC) countries.

The move reflects growing confidence in the country’s macroeconomic recovery and reform momentum, according to a press release issued.

Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb, in an interview with CNN Business Arabia, said Pakistan is no longer seeking aid and is instead pursuing mutually beneficial trade and investment partnerships.

He said this strategic direction, clearly articulated by the Prime Minister, underscores a renewed economic outlook and reform-driven confidence.

The finance minister said Pakistan has remained on a comprehensive macroeconomic stabilization program for the past 18 months, producing tangible results.

Inflation has declined from a peak of 38% to single-digit levels, primary fiscal surpluses have been achieved, the current account deficit remains within targets, the exchange rate has stabilized, and foreign exchange reserves have improved to about 2.5 months of import cover.

He cited two major external validations of Pakistan’s improving economic position: rating upgrades and improved outlooks by all three international credit rating agencies this year, and the successful completion of the second review under the IMF Extended Fund Facility, recently approved by the IMF Executive Board.

Aurangzeb said macroeconomic stability has been achieved through disciplined fiscal and monetary policies combined with structural reforms across taxation, energy, state-owned enterprises, public financial management, and privatization.

The tax-to-GDP ratio has increased from 8.8% to 10.3%, with a roadmap to reach 11% by expanding the tax base and strengthening compliance through technology-driven reforms.

In the energy sector, he highlighted reforms aimed at improving governance in distribution companies, reducing circular debt, rationalizing tariffs, and advancing privatization to make energy more affordable for industry and support economic growth.

The finance minister acknowledged the longstanding support of Saudi Arabia, the United Arab Emirates, and Qatar and noted that Pakistan’s relationship with GCC countries is now evolving from financial assistance to trade expansion and investment.

Remittances remain a key support for the economy, with inflows expected to reach $41–42 billion this year, more than half from GCC states.

Looking ahead, he said Pakistan is actively engaging GCC partners to attract investment in priority sectors including energy, oil and gas, minerals and mining, artificial intelligence, digital infrastructure, pharmaceuticals, and agriculture, while discussions on a Free Trade Agreement with the GCC are at an advanced stage.

Reiterating the government’s direction, Finance Minister Aurangzeb said Pakistan’s economic future lies in trade and investment partnerships rather than aid, with foreign direct investment expected to drive growth, create jobs, and deliver shared economic gains.

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